We don't need Fannie & Freddie. When home prices get low enough people will buy them. Who cares if house values plummet. A house is not a retirement account or something to gain equity so you can pull out equity in order to pay off credit cards. Houses are to live in or rent out for earned income. Monetizing homes only leads to inflation.
Typically homeownership is a person's largest investment. Americans buy homes as an investment to either live in a few years so they can sell--make a down payment for a larger home, etc. To add--if property values never went up--why not just rent the rest of your life?
But--standard lending practices in place requiring down payments--collateral--a good credit rating--and qualifiying at conventional fixed rates would have saved us from this economic collapse.
The way it was--someone who was renting who had to put a deposit down on that rental--lost more money when they walked out on their lease--than someone who bought a 500K custom home--with no down payment or collateral required. The problem--We the American taxpayer co-signed that loan. In fact 50% of the mortgages in this country are co-signed by us--"without" our permission.
Homes can be an investment, but like any investment values are not guaranteed, prices rise & fall with market forces. Government decided to back overpriced investments with tax dollars socializing loss but privatizing profits. That is a sure recipe for disaster driving prices to unfordable levels. It is time for market forces to correct this imbalance so the economy & jobs can recover. The faster & more extreme the correction the sooner this depression will end. It is not the tax payers responsibility to bail out real-estate investors who were stupid & bought in at the top of the market with get rich quick dreams dancing in their heads.
If the government does not quit preventing foreclosures & let the market correct then be prepared for an extended great depression that snowballs & creates a self reinforcing feedback loop. Had they let it collapse already we would be in recovery.